Hero MotoCorp Plans 6th Plant, Scouts for Site in South India

Hero MotoCorp, India's largest two-wheeler maker, plans to set up a plant in South India, its sixth overall, to cater to the domestic market and take its overall annual capacity to 12 million units.

"We are looking to set up a plant in South India. It will be utilised to service the market there. We are scouting for land at the moment," Hero MotoCorp manging director and CEO Pawan Munjal told PTI.

He, however, did not share the details regarding the timeline for the completion as well as the location of the plant.

Sources, however, confirmed that the plant would have an annual capacity of around 1.5-2 million units. When completed, it will take the company's overall capacity to around 12 million units per annum.

The company had earlier set a target of achieving a capacity of 10 million units by 2017.

At present, Hero MotoCorp has three manufacturing facilities - at Gurgaon and Daruhera in Haryana and Haridwar in Uttarakhand - with a total capacity of 6.9 million units annually.

It is set to commission the fourth facility at Neemrana in Rajasthan with an investment of around Rs 400 crore, thereby taking its total installed capacity to over 7.65 million units.

When asked about the current status of the plant at Neemrana, Mr Munjal said, "Currently, a trial run is going on at the facility and the real production would begin shortly."

The company, which sold 6.25 million two-wheelers in 2013-14, is also in the process of building its fifth facility in Halol, Gujarat at an investment of Rs 1,100 crore.

The Gujarat plant is envisaged to have an annual capacity of 1.8 million units and is expected to go on-stream by 2015-16.

Although it has made an aggressive move to foray into several international markets in the last 18 months, Hero MotoCorp is also focusing on the domestic market for further growth.

"I am very bullish about the Indian market and have been pushing my sales team for numbers," he said."

When asked if the company would like to enhance its association with sports and own a team, Mr Munjal said, "As of now, we have not really considered buying a team in any discipline. We have been and will continue to be more of sponsors."

On a personal note, Munjal said football remained a firm favourite for him due to its popularity across the world.

Hero MotoCorp will look to leverage on the popularity of football in future, Mr Munjal said.

"Football for me is of very high interest and with our global forays... we would be keenly looking for business opportunities related with the sport."

Hero MotoCorp sponsors various sports, including hockey, football and golf in India.

When asked if the company is open for sponsoring global football clubs, Mr Munjal said, "Not right now. One possibility is looking at a local club in various markets we are present currently."

The company intends to enter the US and Brazil by 2016 and is also eyeing other markets in Latin America, including Argentina.

It is also in the process of setting up a manufacturing unit in Colombia to cater to Latin American markets.

The company's current focus remains on establishing a strong presence in Africa, Latin America and Central America.

In August 2013, the company had announced plans to enter 50 markets by 2020 with a target of 20 manufacturing units across the globe and an overall annual turnover of Rs 60,000 crore.

It aims at getting 10 per cent of annual sales from export markets at around 1 million units by 2017.

Hero MotoCorp has set a cumulative sales target of 100 million units by 2020, having crossed the 50 million milestone last year.